DHFL: Possible merger, delisting — what next? A look at fresh developments amid rising speculation

Will Piramal Capital and Housing Finance merge itself with Dewan Housing Finance Ltd (DHFL)? There is speculation in the market that a merger could be likely once the required regulatory nods are obtained, sources said.

Yesterday, Piramal Capital and Housing Finance emerged as the winning bidder for troubled, debt-ridden housing finance company. In January this year, the Union Bank-led group of lenders had cleared Piramal's bid for DHFL under IBC resolutions.

The central bank too cleared the Rs 34,250 crore acquisition of DHFL by the Piramal group.


The resolution plan for DHFL was approved by the RBI in February, and by Competition Commission of India (CCI) in April. Piramal’s offer got about 94% votes of the creditors. Rival bidders Oaktree and Adani Capital obtained 45% and 18%, respectively.

The nod for the takeover is conditional as of now. The final decision will come after the NCLAT and the SC deliver final judgements on former promoter Kapil Wadhawan's plea.

A week ago, Wadhawan also challenged in SC a stay order by the Appellate Tribunal, which set aside Mumbai NCLT’s order on fresh consideration of his offer to own the company.

Wadhawan had made a settlement offer — that he will repay lenders by selling assets — to the Committee of Creditors in 2020, only to be rejected on the ground of lack of credibility and dodgy asset valuations that he had cited.

DHFL story in a nutshell
When DHFL went bankrupt, its total debt stood at more than Rs 90,000 crore, with loans owed to a whole host of lenders including banks, MFs and fixed deposit holders.

The company was sent into resolution under IBC by the RBI in 2019. At that time, it was India's third-biggest pure-play mortgage lender.

RBI's decision made DHFL the first finance company to be referred to NCLT under special powers of Section 227 of the IBC.

The company appeared to turn a corner just on the eve of the resolution decision, posting a consolidated net profit of Rs 96.75 crore in Q4. It had reported a net loss of Rs 7,507.01 crore in the like quarter a year ago, and a loss of Rs 13,095.38 crore in Q3 of 2020-21.

For the full 2020-21 FY, the NBFC posted a net loss of Rs 15,051.17 crore, a jump over Rs 13,455.81 crore in 2019-20.

Fresh development
DHFL's shares would be delisted from stock exchanges after the resolution process winds down, sources said. This delisting will be as per India's insolvency rules and Sebi's norms.

"Piramal is committed to collaborating with all relevant authorities, regulators, creditors and investors involved in this resolution and looks forward to a speedy culmination of the resolution process," a statement said.